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AMERICAN DEBT.
ARRANGEMENTS FOR THE FUNDING
OF THE
BRITISH DEBT
'O THE
UNITED . STATES OF AMERICA.
Presented to Parliament by Command of His Majesty.
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LONDON :
PRINTED & PUBLISHED BY HIS MAJESTY’S STATIONERY OFFICE
I'o be purchased through any Bookseller or directly from H.M. STATIONERY OFFICE
at the following addresses: Imperial House, Kingsway, London, W.C.2, and
28 Abingdon Street, London, 8.W.l; York Street, Manchester;
L 8t. Andrew’s Crescent, Cardiff; or 120 George Street, Edinburel.
1923
Cmd. 1912.
Price 3d. net.
PrRopPOsAL dated the 18th day of June, 1923, by His
Britannic Majesty’s Government (hereinafter called
Great Britain) to the Government of the United
States of America (hereinafter called the United
States) regarding the funding of the debt of Great
Britain to the United States.
WHEREAS Great Britain is indebted to the United States as
of 15th December, 1922, upon demand obligations in the princi-
pal amount of $4,074,818,358.44, not including obligations in the
principal amount of $61,000,000, representing advances deemed
to have been made to cover purchases of silver under the Act
of Congress approved 23rd April, 1918, of which $30,500,000 has
been repaid in April and May, 1923, and the balance is to be repaid
in 1924 pursuant to an agreement already made between
the parties, and Great Britain is further indebted to the United
States as of 15th December, 1922, on account of interest accrued
from 15th April and 15th May, 1919, on said $4.074.818.358.44,
principal amount of demand obligations.
AND WHEREAS Great Britain has power under the War Loan
Act, 1919 (2 and 10 Geo. 5, cap. 37) to issue securities in exchange
for maturing securities issued under the War Loan Acts. 1914 to
1918 :
AND WHEREAS the demand obligations now held by the
United States Treasury were so issued, and will become payable
npon the request of the United States Treasury for their payment :
Now THEREFORE Great Britain proposes, in the exercise of the
powers above recited and in consideration and in faith of the
statements, conditions, premises and mutual covenants herein
contained, to issue to the United States in exchange for the
demand obligations now held by the United States Treasury
securities which shall be in their terms and conditions in
accordance with the following provisions -—
1. Amount of Indebtedness.
The total amount of indebtedness to be funded is
$4,600,000,000 which has been computed as follows :—
Principal amount of de-
mand obligations to be
funded L
Interest accrued thereon
from April 15 and
May 15, 1919, respec-
tively to December 15,
1922, at the rate of
42 per cent. per
INH
£629 836.106.99
Less—Payments made
by Great Britain on
October16and Novem-
ber 15, 1922, on ac-
count of interest, with
interest thereon at 4%
per cent. per annum
from said dates re-
spectively to Decem-
ber 15, 1922 ... ue
Total principal and in-
terest accrued and
unpaid as of Decem-
ber 15, 1922 ... 1
Paid in cash by Great
Britain, March 15,
1928 ... LL. Co
Total indebtedness to be
funded into bonds of
Great Britain B
$100,526,379.69
$529,309,727.50
$4,604,198,085.74
$4,128.,085.74
$4,600,000,000.00
2. Issue of Long-Time Obligations.
The securities, which it is proposed to issue at par as promptly as
possible, shall be obligations in the principal amount of
$4,600,000,000, in the form of Bonds to be dated 15th December,
1922, maturing 15th December, 1984, with interest payable semi-
annually on 15th June and 15th December in each year at the
rate of 3 per cent. per annum from 15th December, 1922, to 15th
December, 1932, and thereafter at the rate of 3% per cent. per
annum until the principal thereof shall have been repaid.
3. Method of Payment.
The Bonds shall be payable as to both principal and interest
in United States gold coin of the present standard of weight and
fineness, or its equivalent in gold bullion, or, at the option of Great
Britain, upon not less than thirty days’ advance notice
in any bonds of the United States, issued or to be issued
after the 6th April, 1917, to be taken at par and accrued
interest to the date of payment hereunder: provided however
that Great Britain may at its option, upon not less than
ninety days’ advance notice, pay up to one half of any interest
accruing between 15th December, 1922, and 15th December,
1927, on any British bonds proposed to be issued hereunder, in
bonds of Great Britain, maturing 15th December, 1984, dated
and bearing interest from the respective dates when the interest
to be paid thereby becomes due, and substantially similar in other
respects to the original bonds proposed to be issued hereunder.
All payments to be made by Great Britain on account of the
principal or interest of any bonds proposed to be issued hereunder.
11789
shall be made at the Treasury of the United States in Washington,
or, ab the option of the Secretary of the Treasury of the United
States, at the Federal Reserve Bank of New York, and if in cash
shall be made at the option of Great Britain in gold coin of the
United States or in gold bullion or in immediately available funds,
or if in bonds, of the United States, shall be in form
acceptable to the Secretary of the Treasury of the United
States Treasury. Appropriate notation of all payments on
account of principal shall be made on the bonds proposed to
be issued hereunder which may be held by the United States.
Provided, however, that all payments in respect of any market
obligations issued under Paragraph 9 of this Proposal shall be made
at the office of the fiscal agents of the British Government in the
City of New York.
4. Exemption from Taxation.
The principal and interest of all bonds issued or to be issued
hereunder, shall be exempt from all British taxation, present or
future, so long as they are in the beneficial ownership of the United
States, or of a person, firm, association or corporation neither
domiciled nor ordinarily resident in the United Kingdom:
5. Form of Bonds.
All Bonds proposed to be issued hereunder to the United States
shall be payable to the United States of America, or order, shall be
issued, so far as possible, in denominations of $4,600,000 each,
and shall be substantially in the form set forth in the exhibit
annexed hereto, and marked * Exhibit A.’ The bonds shall be
signed for Great Britain by the Counsellor of His Britannic
Majesty's Embassy at Washington.
6. Repayment of Principal.
To provide for the repayment of the total principal of the debt
before maturity of the $4,600,000,000 principal amount of bonds
to be issued, it is proposed that the bonds shall contain provisions
the effect of which shall be that Great Britain shall make to the
United States payments, on account of the original principal
amount of the bonds to be issued, in the amounts and on the
dates named in the following Table :—
Date.
15th December
1928
1924
1925
1926
1927
1928
19290
1930
1931
Annual instalments to
be paid on account of
principal.
$23,000,000
23,000,000
24,000,000
25,000,000
25,000,000
27,000,000
27,000,000
28,000,000
28 000.000
Date.
15th December :(—
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
Annual instalments to
be paid on account of
principal.
$30,000,000
32,000,000
32,000,000
32,000,000
32,000,000
37,000,000
37,000,000
37,000,000
12,000,000
42,000,000
42,000,000
42,000,000
46,000,000
16,000,000
16,000,000
51,000,000
51,000,000
51,000,000
53,000,000
55,000,000
57,000.000
60,000,000
54,000,000
54,000,000
64,000,000
67,000,000
70,000,000
72,000,000
74,000,000
78,000,000
78,000,000
33,000,000
35,000,000
89,000,000
94,000,000
96,000,000
100,000,000
105,000,000
110,000,000
114,000,000
119,000,000
123,000,000
127,000,000
132,000,000
186,000,000
141,000,000
146 000.000
Date.
15th December ~—
1979
1980
1981
1982
1983
19R4.
Total
Annual instalments to
be paid on account of
principal.
$151,000,000
156,000,000
162,000,000
167,000.000
175,000,000
175.000.0000
%4.600.000,000
Provided, however, that Great Britain may at its option,
upon not less than ninety days’ advance notice, postpone
any payment of principal falling due as hereinabove pro-
vided to any subsequent 15th June or 15th December, not
more than two years distant from its due date, but only on con-
dition that if Great Britain shall at any time exercise this option
as to any payment of principal, the payment falling due in
the next succeeding year cannot be postponed to any date more
than one year distant from the date when it becomes due, unless
and until the payment previously postponed shall actually have
been made, and the payment falling due in the second succeeding
year cannot be postponed at all unless and until the payment of
principal due two years previous thereto shall actually have been
made
In the event of Great Britain issuing bonds to the United
States in payment of interest accruing between 15th December,
1922, and 15th December, 1927, as proposed in paragraph 3
above, the bonds so issued shall contain provision for the payment
of their principal before maturity through annual instalments
on account of principal corresponding substantially to the
schedule of payments on account of principal appearing in the
Table hereinabove get forth.
7. Payments before Maturity.
Great Britain may at its option, on any interest date or dates,
upon not less than ninety days’ advance notice make advance
payments of principal, in addition to the payments required to
be made by the provisions of the bonds in accordance with
paragraph 6 of this proposal. Any such additional paymenss
shall first be applied to the principal of any bonds which
shall have been issued hereunder on account of interest accruing
between 15th December, 1922, and 15th December, 1927, and
then to the principal of any other bonds which shall have been
issued hereunder. Any payments made to the United States
under this provision shall be in amounts of $1,000,000 or multiples
thereaf
3. Calculation of Interest.
Notwithstanding anything herein contained, the interest pay-
able from time to time on the bonds proposed to be issued shall
be computed on the amount of the principal outstanding on the
previous interest date, with adjustments in respect of any pay-
ment on account of principal which may have been made since
the previous interest date.
J. Exchange for Marketable Obligations.
Great Britain will issue to the United States at any time or
from time to time, at the request of the Secretary of the Treasury
of the United States, in exchange for any or all of the bonds
proposed to be issued hereunder and held by the United States,
definitive engraved bonds in form suitable for sale to the public,
in such amounts and denominations as the Secretary of the
Treasury of the United States may request, in bearer form, with
provision for registration as to principal, and/or in fully registered
form, and otherwise on the same terms and conditions, as to
dates of issue and maturity, rate or rates of interest, exemption
from taxation, payment in bonds of the United States issued
or to be issued after 6th April, 1917, payment before maturity,
and the like, as the bonds surrendered on such exchange,
except that the bonds shall carry such provision for repayment
of principal as shall be agreed upon; provided that if no
agreement to the contrary is arrived at, any such bonds
shall contain separate provision for payments before maturity,
wonforming substantially to the table of repayments prescribed by
paragraph 6 of this proposal and in form satisfactory to the
Secretary of the Treasury of the United States, such payments
‘0 be computed on a basis to accomplish the retirement of any
such bonds by December 15, 1984, and to be made through
wnual drawings for redemption at par and accrued interest,
Any payments of principal thus made before maturity on any
such bonds shall be deducted from the payments required to be
made by Great Britain to the United States in the corresponding
years under the terms of the table of repayments set forth in
paragraph 6 of this proposal.
Great Britain will deliver definitive engraved bonds to the
United States in accordance herewith within six months of
receiving notice of any such request from the Secretary of the
Treasury of the United States, and pending the delivery
of the definitive engraved bonds will, at the request of
the Becretary of the Treasury of the United States, deliver
temporary bonds or interim receipts in a form to be agreed upon
within three months of the receipt of such request. The United
States before offering any such bonds or interim receipts for sale
in Great Britain will first offer them to Great Britain for pur-
chase at par and accrued interest, and Great Britain shall like.
wise have the option, in lieu of issuing to the United States any
such bonds or interim receipts, to make advance redemption at
par and accrued interest, of a corresponding amount of bonds
wanted hereunder and held by the United States.
10. Cancellation and Surrender of Demand Obligations.
Upon the delivery to the United States of the $4,600,000,000
principal amount of bonds proposed to be issued hereunder, the
United States will cancel and surrender to Great Britain through
the British Ambassador at Washington, or his representative,
1 the Treasury of the United States in Washington, the
demand obligations of Great Britain in the principal amount
A ©4 074.818.358.44 described in the preamble to this Proposal.
11. Notices.
Any notice, request or consent under the hand of the Secretary
of the Treasury of the United States shall be deemed and taken
as the notice request or consent of the United States, and shall
be sufficient if delivered at the British Embassy at Washington
or at the office of the Permanent Secretary of the British
Treasury in London; and any notice, request, or election from
or by Great Britain shall be sufficient if delivered to the American
Embassy in London or to the Secretary of the Treasury of the
United States -at the Treasury of the United States in
Washington. The United States in its discretion may waive
any notice required hereunder, but any such waiver shall be in
writing and shall not extend to or affect any subsequent notice
or impair any right of the United States to require notice here-
ander.
Signed on behalf of the Tords Commissioners of His
Majesty's Treasury this eighteenth day of June, 1923.
A. C. GEDDES,
His Britannic Majesty's Ambassador
Fxtraordinary and Plenipotentiary.
Washington.
EXHIBIT ¢“ A.”
(Form of Bond.)
GovERNMENT oF THE UNITED KINGDOM SIXTY-TWO YEAR 3-3% PER CENT. GOLD
Bonb.
Dated 15th December, 1922-— Maturing 15th December. 1984.
5.
No.
The Government of the United Kingdom, hereinafter called Great
Britain. for valu received, promises to pay to the United States
of America, herinafter called the United States, or order, on
the 15th day of December, 1984, the sum of four million, six hundred
thousand dollars ($4,600,000), less any amount which may have been
paid upon the principal hereof as endorsed upon the back thereof, and
to pay interest upon said principal sum semi-annually on the 15th day of
June and December in each year, at the rate of three per cent. per annum
irom 15th December, 1922, to 15th December, 1932, and at the rate of
three and one-half per cent. per annum thereafter until the principal
hereof shall have been paid. All payments on account of principal
and/or interest shall be made at the Treasury of the United States in
Washington or, at the option of the Secretary of the Treasury of the United
States, at the Federal Reserve Bank of New York. This bond is payable
2s to both principal and interest in gold coin of the United States of
America of the present standard of weight and fineness or in its equivalent
in gold bullion, or at the option of Great Britain, upon not less less than
bhirty days’ notice, indicating the minimum amount which it is
contemplated to pay at next due date in gold cash or available funds, in
any bonds of the United States issued or to be issued after 6th April, 1917,
bo be taken at par and accrued interest to the date of payment hereunder;
provided, however, that Great Britain may at its option, upon not less
than ninety days’ advance notice, pay up to one-half of any interest
accruing hereon between 15th December, 1922, and 15th December,
1927, in bonds of (reat Britain dated and bearing interest from the
respective dates when the interest to be paid thereby becomes due, and
substantially similar in maturity and other respects to this bond.
The principal and interest of this bond shall be exempt from all British
taxation, present or future, so long as it is in the beneficial ownership
of the United States or of a person, firm, association or corporation
neither domiciled nor ordinarily resident in the United Kinedom.
In order to provide for the amortisation of this bond hefore maturity,
Great Britain will make to the United States payments of principal in
the amounts, and on the dates shown in thes following Table : —
Date,
[5th December
1923
1924
1925
1926
1927
1928
1929
1930
1931
1932
10393
Annual instalments te
be poid on account of
nrinecinal.
3
23,000
23,000
24,000
25,000
25,000
27,000
27,000
98,000
28.000
30,000
39 000
Date.
15th December : —
1934
1985
1936
1937
1938
1939
1940
1941
1942
1943
1944
1945
1946
1947
1948
1949
1950
£951
1952
1953
1954
1955
1956
(957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1978
1974
1975
1976
1977
1978
1979
980
1981
1982
1©83
1984.
Annual instalments te
be paid on account of
principal.
$
32,000
32,000
32,000
37,000
37,000
37,000
42,000
42,000
42,000
12,000
46,000
46,000
46,000
51,000
51,000
51,000
53,000
55,000
57,000
60,000
64,000
54,000
64,000
67,000
70,000
72,000
74,000
78,000
78,000
83,000
85,000
89,000
94,000
96,000
100,000
105,000
110,000
114,000
119,000
123,000
127,000
132,000
136,000
141,000
146,000
151,000
156,000
162,000
167,000
175,000
175.000
Provided, however, that Great Britain may, at its option, upon not less
than ninety days’ advance notice, postpone any payment of principal
falling due as hereinabove provided to any subsequent 15th June or
15th December, not more than two years distant from ite due date, but
only on condition that if Great Britain shall at any time exercise this
option as to any payment of principal, the payment falling due in
the next succeeding vear cannot be postponed to any date more
than one year distant from the date when it becomes due unless
ind until the payment previously postponed shall actually have
been made, and the payment falling due in the second succeeding
year cannot be postponed at all unless and until the payment
»f principal due two vears previous thereto shall actually have been
made.
This bond may be paid on any interest date before maturity in whole
or in part, in amounts of $1,000,000 or multiples thereof, at the option of
Great Britain, on not less than ninety days’ advance notice. -
This bond is issued by Great Britain pursuant to the Proposal, dated
the 18th day of June, 1923, and to the Acceptance of Proposal. dated the
19th dav of June. 1999.
In Witness whereof Great Britain has caused this bond to be
2xecuted in its behalf by the Counsellor of His Britannic Majesty’s
Embassy at Washington, thereunto duly authorised. .
For the United Kinedom *
Dated 15th December. 1999.
(Back.)
The following amounts have been
his bond» —
Date... ...
paid upon the principal amount of
Amount paid...
A COEPTANCE
The Right Honorable
Sir Avckranp Geppnes, G.C.M.G., K.C.B,,
Ambassador Extraordinary and Plenipotentiary,
The British Embassy,
Washington, D.C.
My Dear MR. AMBASSADOR,
I have the honor to acknowledge the receipt of your note of the
18th June, 1923, transmitting the proposal dated the 18th day of June,
1923, by His Britannic Majesty’s Government to the Government
of the United States of America regarding the funding of the
debt of Great Britain to the United States. This proposal is agreeable
bo the World War Foreign Debt Commission, and I am writing for the
Oommission and by its authority to advise you that the proposal is hereby
accepted on behalf of the United States of America, pursuant to the
authority conferred by the Act of Congress approved February 9, 1922,
as amended by the Act of Congress approved February 28, 1923.
In accordance therewith I am writing to ask that bonds as contemplated
thereby may be delivered as soon as possible to the Secretary of the
Treasury of the United States in exchange for the demand obligations
amounting to $4.074.818.358.44 now held by him. which are otherwise
now pavable.
Verv trulv vours.
A. W. MEernLon.
Secretary of the Treasury and Chairman of the
World War Foreian Debt Commission.
Approved
Warren GG. Harbpixng.
Presiden
June 19, 1923.
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ulation of Interest.
7ithstanding anything herein contained, the interest Pay-
ym time to time on the bonds proposed to be issued shall
puted on the amount of the principal outstanding on the
18 interest date, with adjustments in respect of any pay-
in account of principal which may have been made since
vious interest date.
hange for Marketable Obligations.
t Britain will issue to the United States at any time or
me to time, at the request of the Secretary of the Treasury
United States, in exchange for any or all of the bonds
'd to be issued hereunder and held by the United States,
v6 engraved bonds in form suitable for sale to the public,
‘amounts and denominations as the Secretary of the
"y of the United States may request, in bearer form, with
m for registration as to principal, and/or in fully registered
nd otherwise on the same terms and conditions, as to
f issue and maturity, rate or rates of interest, exemption
ation, payment in bonds of the United States issued
© 1ssued after 6th April, 1917, payment before maturity,
e like, as the bonds surrendered on such exchange,
that the bonds shall carry such provision for repayment
wipal as shall be agreed upon; provided that if no
ent to the contrary is arrived at, any such bonds
mtain separate provision for payments before maturity,
ing substantially to the table of repayments prescribed by
ph 6 of this proposal and in form satisfactory to she
ry of the Treasury of the United States, such payments
mputed on a basis to accomplish the retirement of any
onds by December 15, 1984, and to be made through
drawings for redemption at par and accrued interest.
ments of principal thus made before maturity on any
nds shall be deducted from the payments required to be
y Great Britain to the United States in the corresponding
nder the terms of the table of repayments set forth in
ph 6 of this proposal.
Britain will deliver definitive engraved bonds to the
States In accordance herewith within six months of
8 notice of any such request from the Secretary of the
y of the United States, and pending the delivery
definitive engraved bonds will, at the request of
retary of the Treasury of the United States, deliver
ry bonds or interim receipts in a form to be agreed upon
shree months of the receipt of such request. The United
refore offering any such bonds or interim receipts for sale
+ Britain will first offer them to Great Britain for pur-
b par and accrued interest, and Great Britain shall like-
ve the option, in lieu of issuing to the United States any